Monthly roundup - August 2011
Staying on top of developments
August 2011 edition
Issued 05 September 2011
In this edition:
- Monthly highlights
- New pronouncements
- Standard setter meetings
- New Deloitte publications
- Other developments
IASB proposes consolidation exemption for ‘Investment Entities’
The International Accounting Standards Board (IASB) has issued Exposure Draft ED/2011/4 Investment Entities which proposes exempting ‘investment entities’ from the consolidation accounting requirements of IFRS 10 Consolidated Financial Statements. Investment entities would be required to measure their investments (including those in associates and joint ventures) at fair value through profit and loss in accordance with IFRS 9 Financial Instruments and to provide additional disclosures to enable users of its financial statements to evaluate the nature and financial effects of its investment activities.
An investment entity is defined in the exposure draft as an entity that meets all of the following criteria:
- The entity's only substantive activities are investing in multiple investments for capital appreciation, investment income (such as dividends or interest), or both
- The entity makes an explicit commitment to its investors that the purpose of the entity is investing to earn capital appreciation, investment income or both
- Ownership in the entity is represented by units of investments, such as shares or partnership interests, to which proportionate shares of net assets are attributed
- The funds of the entity's investors are pooled so that the investors can benefit from professional investment management. The entity has investors that are unrelated to the parent (if any), and in aggregate hold a significant ownership interest in the entity
- Substantially all of the investments of the entity are managed, and their performance is evaluated, on a fair value basis
- The entity provides financial information about its investment activities to its investors. The entity can be, but does not need to be, a legal entity.
The proposals do not to permit a parent of an investment entity to retain fair value accounting applied by its subsidiary, unless the parent itself qualifies as an investment entity, i.e. the parent would consolidate all entities in the group.
Although the exposure draft does not indicate an application date it is likely to be aligned with that of IFRS 10 being financial periods beginning on or after 1 January 2013. The AASB has yet to issue an equivalent exposure draft but will do so in due course.
AASB released the suite of six standards
The AASB has issued a suite of six related standards: AASB 10 ‘Consolidated Financial Statements’, AASB 11 'Joint Arrangements', AASB 12 'Disclosure of Interests in Other Entities', AASB 127 'Separate Financial Statements' (2011), AASB 128 'Investments in Associates and Joint Ventures' (2011), and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards’, that aim to improve the accounting requirements for consolidated financial statements, joint arrangements and off balance sheet activities. These standards are applicable from 1 January 2013, with early adoption allowed by for-profit entities.
These standards incorporate the recent IFRSs issued by the IASB. Please refer our earlier edition May 2011 Monthly Roundup for a detailed discussion and links to relevant newsletters and podcasts on these changes.
(A listing of new accounting standards, interpretations, exposure drafts, discussion papers and similar documents issued during the month by the AASB and IASB/IFRIC, along with other IFRS-related documents by other bodies that may be of interest and related links to Deloitte publications and alerts. See also our What’s new in the June 2011 financial reporting cycle summary.)
Australian Accounting Standards Board (AASB)
|Pronouncement||Key dates||More information|
AASB 10 ‘Consolidated Financial Statements’, AASB 11 'Joint Arrangements', AASB 12 'Disclosure of Interests in Other Entities', AASB 127 'Separate Financial Statements' (2011), AASB 128 'Investments in Associates and Joint Ventures' (2011), and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards’
This suite of six related standards incorporates the recent IFRSs issued by the IASB, which aim to improve the accounting requirements for consolidated financial statements, joint arrangements and off balance sheet activities.
|Applicable from 1 January 2013, with early adoption allowed by for-profit entities||
May 2011 Monthly Round up (for links to newsletters, podcasts etc)
ED 214 Extending Related Party Disclosures to the Not-for-Profit Public Sector
Proposes the requirements in AASB 124 Related Party Disclosures to apply unamended to NFP public sector entities.
Accordingly, certain transactions between government-related entities of the same jurisdiction would not be required to be disclosed in detail, and other related party transactions, such as Ministerial transactions, would only be disclosed if material.
Comments due by 31 January 2012
Proposed effective date 1 July 2013
|ED 214 (PDF 293kb)|
ED 215 Mandatory Effective Date of IFRS 9
Incorporates IASB ED/2011/3; proposes amendments to AASB 9 Financial Instruments, issued in December 2009 and December 2010, to push back the mandatory effective date of AASB 9 Financial Instruments from 1 January 2013 to 1 January 2015.
|Comments due to the AASB by 7 October 2011 and to the IASB by 21 October 2011||ED 215 (PDF 295kb)|
ITC 25 Request for Comment on IASB Request for Views on Agenda Consultation 2011
Aim of the agenda consultation is to gather views, from all those interested in financial reporting, on the strategic direction and overall balance of the IASB work plan, as well as on the priority of individual projects or agenda areas over the next three years.
|Comments due to the AASB by 10 November 2011||ITC 25 (PDF 436kb)|
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
Exposure Draft ED/2011/3 Mandatory Effective Date of IFRS 9 (proposed amendment to IFRS 9 (November 2009) and IFRS 9 (October 2010))
Proposes to push back the mandatory effective date of IFRS 9 Financial Instruments from 1 January 2013 to 1 January 2015.
The Board seeks to align the effective dates for all phases of the project (both completed and ongoing). The proposed deferral would only change the date when IFRS 9 would be mandatory. Entities could still elect to use IFRS 9 before 2015.
|Comments due by 21 October 2011||
ED/2011/3 (PDF 126kb)
IFRS 9 Financial Instruments Status Update (PDF 748kb)
IFRS in Focus newsletter (PDF 69kb)
Exposure Draft ED/2011/4 Investment Entities*
Proposes to define 'investment entities' as a separate type of entity that would be exempt from the consolidation accounting requirements in IFRS 10 Consolidated Financial Statements.
Instead, the investment entity would be required to measure those investments at fair value, with changes in fair value recognised in profit or loss.
|Comments due by 5 January 2012||
ED/2011/4 (PDF 341kb)
* Equivalent pronouncement not yet issued by the AASB
(A listing of meetings of various standard setters during the month or where documents were issued during the month in respect of the previous month’s meetings, with links to our analysis, agenda papers and so on)
No main AASB or IASB meetings were held in August 2011.
Upcoming IFRS Interpretations Committee (IFRIC) meeting is scheduled to be held on 8 and 9 September 2011 (IAS Plus article )
New Deloitte publications
(Key IFRS-related and other publications issued by Deloitte during the month, not covered elsewhere. You can find full details and back issues of our various publications by following these links: Accounting alerts, IAS Plus publications, IFRS in Focus Newsletters, Webcasts, and Podcasts)
- IFRS in Focus — IASB issues request for views on agenda consultation (PDF 67kb)
- IFRS Industry Insights: The new consolidation standard - insights for the investment management industry (PDF 503kb)
- IFRS on Point — IFRS Accounting Developments and Information: July 2011 (PDF 73kb)
- IFRS 9 Impairment Survey 2011 – A changing landscape (PDF 1,200kb) a global banking survey on the topic of loan impairment by Deloitte's Global Financial Service Industry (GFSI) group that provides insights into current thinking across the industry
- IFRS 9 Financial Instruments Status Update (PDF 748kb) from Deloitte's UK Financial Services Industry group
- Updated IASB Project Insights: Leases (PDF 116kb), Revenue recognition (PDF 86kb), Insurance Contracts (PDF 130kb), Financial Instruments — Impairment (PDF 239kb), Financial Instruments — asset and liabilities offsetting (PDF 44kb), Financial Instruments — Hedge Accounting (PDF 264kb)
Other publications of interest
- Property Intellectual newsletter: Australia's Carbon Pricing Mechanism - What does it mean for the Real Estate sector?
- Australia's carbon price — June 2011 financial reporting implications (PDF 1,123kb)
- Accounting Roundup: July 2011 (PDF 354kb) - Deloitte US publication
- Heads Up — PCAOB Issues Concept Release on Auditor Independence and Audit Firm Rotation (PDF 99kb) discusses the recently issued Concept Release on Auditor Independence and Firm Rotation by the Public Company Accounting Oversight Board (PCAOB)
- Heads Up — Recap of Lease Redeliberation Results (PDF 262kb)
- Financial Reporting Alert 11-5 Financial Reporting Considerations Related to S&P's Downgraded Credit Rating for U.S. Long-Term Sovereign Debt (link to Deloitte (United States) website)
- Key Factors Shaping Financial Reporting — The decade ahead (PDF 213kb)
- Insurance Accounting Newsletter- The post-Tweedie insurance project: an uncertain horizon (PDF 606kb)
- Robert Bruce Column ‘Brickbats and Buybacks’
Deloitte comment letters
- Deloitte Comment Letter (PDF 29kb) on IAS 27 Consolidated and Separate Financial Statements - Group reorganisations in separate financial statements
- Deloitte Comment Letter (PDF 23kb) on IFRS 3 Business Combinations - Acquirer in a reverse acquisition
- Deloitte Comment Letter (PDF 23kb) on IFRS 3 Business combinations involving newly formed entities: business combinations under common control
- Deloitte Comment Letter (PDF 26kb) on IFRS 3 Business combinations involving newly formed entities: factors affecting identification of the acquirer
- Deloitte Comment Letter (PDF 104kb) to the European Financial Reporting Advisory Group (EFRAG) on its Discussion Paper Considering the Effects of Accounting Standards
- Deloitte Comment Letter (PDF 321kb) to the US Securities and Exchange Commission (SEC) on its views of the SEC staff paper, Work Plan for the Consideration of Incorporating International Financial Reporting Standards Into the Financial Reporting System for U.S. Issuers — Exploring a Possible Method of Incorporation
Deloitte Webcasts and Podcasts
- IFRS: Important Developments (link to external site, registration required) discusses the standard-setting developments at the International Accounting Standards Board (IASB)
- Stay Tuned Online – IFRS and UK GAAP update
- Upcoming Dbriefs webcasts: Sustainability Reporting Update: One Big Global Family? (7 September 2011) and Leases: A Comprehensive Update on the Joint Project (8 September 2011) (IAS Plus article)
(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our August historical summary on IAS Plus. You can also subscribe to our Deloitte IAS Plus RSS feed to be kept informed of developments as they happen)
- The Australian Accounting Standards Board (AASB) has launched a survey to seek user perspective on the initial accounting for intangible assets acquired in business combinations under IFRS 3 Business Combinations and IAS 38 Intangible Assets (IAS Plus article)
- The AASB has submitted comments to the IFRS Interpretations Committee on two tentative agenda decisions relating to IFRS 3 Business Combinations – business combinations involving newly formed entities
- The Australian Securities and Investments Commission (ASIC) has released as Information Sheet 144 Annual general meetings: Voting on the remuneration report resolution guidance on how companies should apply the new rules concerning the voting by chairmen of undirected proxies on remuneration reports at AGM’s
International Accounting Standards Board
- The IASB has published a report (PDF 252kb) which presents an analysis of the effects of IFRS 11 Joint Arrangements (and related disclosures included in IFRS 12 Disclosure of Interests in Other Entities); including the IASB's expectations of how the IFRS will affect the accounting for current and new joint arrangements according to their structure and legal forms (IAS Plus article)
- IFRS Foundation has updated IFRS XBRL Taxonomy for IAS 1 and IAS 19 amendments (IAS Plus article)
- IASB's Investor Perspectives newsletter Benefits of the IASB’s recent revisions to pension accounting
- IASB's Investor Perspectives newsletter The IASB needs input from investors and others on which projects it should undertake next
- The IASB’s latest work plan has been released with a revised timetable for final standards
- A near final draft of IFRIC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine has been posted to the IASB's website (IAS Plus article)
- The Financial Accounting Standards Board (FASB) and European Financial Reporting Advisory Group (EFRAG) have formally agreed to work together on their respective projects to develop a disclosure framework, with a view to creating a consistent framework for both United States and international GAAP (IAS Plus article)
External webcasts and Podcasts
- Hedge Accounting - IASB webcast- an update on the general hedge accounting project
- IASB’s agenda consultation webcast- consultation on the IASB’s future agenda
Other global news
- The European Financial Reporting Advisory Group (EFRAG) plans to conduct field-testing of the revised IASB proposals on revenue recognition, which are expected to be published by the end of September 2011. The purpose of the field-testing is to identify potential implementation and application concerns, and to estimate the effort required to implement and apply the proposals (IAS plus article)
- EFRAG has issued a report (PDF 121kb) regarding costs of implementing country-by-country reporting by multinational companies, with the main focus being the companies active in an extractive industry in third countries (IAS plus article)
- The Organisation for Economic Co-operation and Development (OECD) has released a report highlighting the likely impacts of IAS 19 amendments (IAS plus article)
- The American Institute of Certified Public Accountants (AICPA) has recommended optional adoption of IFRS by US public companies in its comment letter to the US Securities and Exchange Commission (SEC) (IAS plus article)
- The European Securities and Markets Authority (ESMA) has published its eleventh batch of extracts from the enforcement decisions taken by EU national enforcers of financial information (IAS plus article)
- Harvard Business School has released a draft working paper, The international politics of IFRS harmonization, that explores the international political dynamics of IFRS adoption (IAS plus article)